Hungary - Foreign investment

Even before the repudiation of communism, Hungary sought to enter joint
ventures with Western countries. By the end of 1996, Hungary had
attracted $15 billion in foreign direct investment. Since 1989, Hungary
has attracted nearly one-third of all foreign direct investment in
Central Europe and Eastern Europe. In 1995–96, the government
adopted a stringent economic reform program of liberalization and
privatization, and by 2002, the private sector, which had been 20% of
the economy in 1989, was about 80%. Hungary has five free trade zones in
which corporations are treated as foreign and are exempt from custom
duties and taxes.

In the period 1988 to 1990, Hungary's share of world FDI inward
flows was five and a half times its share in world GDP, the
sixth-largest ratio in the world. Annual foreign direct investment (FDI)
inflows into Hungary reached a peak in 1995 at about $4.5 billion, from
which point they declined steadily until 2001, when there was an upswing
to $2.4 billion from $1.6 billion in 2000. In 2002, FDI inflow fell to
less than $1.5 billion. The average FDI inflow from 1998 to 2001 was
about $2 billion a year. For the period 1998 to 2000, Hungary's
share of FDI inflows was about equal to its share of world GDP. Total
FDI stock, from 1989 to 2002, is estimated at about $34 billion.

The largest single source of foreign investment has been the United
States, followed by Germany, the Netherlands, Austria, the United
Kingdom, and France.

Of foreign capital invested in Hungary through 2000, 50% has been in
manufacturing, 15% in telecommunications, 13% in energy, 6% in banking
and finance, and 10% in other areas.

FDI outflows from Hungary have averaged about $400,000 per year and as
of 2001, foreign stock held by Hungarians totaled $2.2 billion.

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